2016-10-26 13:01:29 CEST
2016-10-26 13:01:29 CEST
REGULATED INFORMATION
Vaisala - Interim report (Q1 and Q3)
Vaisala Corporation Interim Report January-September 2016
Vaisala Corporation
Interim Report
October 26, 2016 at 2.00 p.m. (EET)
Vaisala Corporation Interim Report January-September 2016
In the third quarter 2016, net sales were at last year's level, EUR 81.8 million
and operating result was EUR 5.3 (14.1) million.
July-September 2016 highlights
* Orders received EUR 76.6 (84.3) million, decrease 9%
* Order book EUR 114.8 (139.7) million, decrease 18%
* Net sales EUR 81.8 (81.7) million, increase 0%
* Gross margin 53.9% (53.3%)
* Operating result EUR 5.3 (14.1) million
* EUR 10.5 million write-down of intangible assets to Weather Business Area's
operating result
* Earnings per share EUR 0.21 (0.58)
* Cash flow from operating activities EUR 10.0 (4.6) million, increase 118%
* Business outlook for 2016: Vaisala estimates its full year 2016 net sales to
be in the range of EUR 310-330 million and its operating result (EBIT) to be
in the range of EUR 18-28 million.
January-September 2016 highlights
* Orders received EUR 218.3 (231.7) million, decrease 6%
* Net sales EUR 226.0 (217.4) million, increase 4%
* Gross margin 51.4% (49.8%)
* Operating result EUR 7.7 (10.5) million
* EUR 10.5 million write-down of intangible assets to Weather Business Area's
operating result
* Earnings per share EUR 0.26 (0.54)
* Cash flow from operating activities EUR 17.1 (9.8) million, increase 74%
* Cash and cash equivalents EUR 49.9 (34.1) million, increase 46%
Vaisala's President and CEO Kjell Forsén comments on third quarter 2016
"Vaisala's third quarter 2016 net sales were at last year's level and totaled
EUR 81.8 million. Weather Business Area's net sales decreased by 8% to EUR 53.4
million due to low volume of project deliveries and especially weather radar
projects. Controlled Environment Business Area continued its strong performance
in all regions with fastest sales growth in Japan. Controlled Environment
Business Area's net sales increased by 21% year-on-year to EUR 28.4 million.
Vaisala's third quarter orders received decreased by 9% year-on-year to EUR
76.6 million. Weather Business Area's orders received decreased by 21% to EUR
48.5 million. Order intake was slow in Meteorology Infrastructure and
Transportation and the received contracts were of smaller value when compared
with previous year. Controlled Environment Business Area's orders received
increased significantly by 21% to EUR 28.1 million.
As a result of weaker than expected performance in Energy market, Vaisala
recorded a EUR 10.5 million write-down of intangible assets to Weather Business
Area's operating results in the third quarter 2016. Renewable energy market is
solid and growing steadily. Vaisala will focus its Energy business unit to areas
of more sustainable long-term competitive differentiation and develop its
offering based on industry leading renewable energy measurement systems,
resource assessment and asset management solutions utilizing extensive wind and
solar resource databases and advanced modelling capabilities.
During the third quarter, Vaisala expanded its offering in the growing air
quality monitoring market and acquired new technology from Envitems Oy. Vaisala
has been supplying weather instruments for traditional air quality monitoring as
well as research for decades. Combined with the new innovative air quality
instruments, Vaisala is in a good position to enable a true representation of
the spatial air quality situation even in complex terrains and urban areas.
In June, 2016 Vaisala signed an agreement to sell certain Transportation
products and field services in the U.S. The transition has progressed well and
the first phase of the business transfer was completed according to the plan in
the beginning of August and majority of the second phase was executed during
September. Vaisala recognized EUR 1.1 million profit from the divestiture in the
third quarter.
In the third quarter 2016, Vaisala's operating result was EUR 5.3 million but
excluding the write-down of intangible assets the operating result was EUR 15.8
million or 19 % of net sales increasing EUR 1.7 million from previous year.
Weather Business Area's operating result decreased from EUR 8.2 million to EUR
-3.3 million mainly due to lower net sales and the above mentioned write-down.
Excluding the write-down, the operating result was EUR 7.3 million. Controlled
Environment Business Area continues to deliver a good 60% gross margin and 26%
operating profit.
On October 7, 2016, Vaisala as a consequence of the write-down lowered its
operating result and narrowed its net sales outlook for 2016. Vaisala now
estimates that full year 2016 operating result (EBIT) will be in the range of
EUR 18-28 million and net sales in the range of EUR 310-330 million."
Key Figures
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2016 2015 2016 2015 2015
-------------------------------------------------------------------------------
Orders received, EUR million 76.6 84.3 218.3 231.7 320.0
Order book, EUR million 114.8 139.7 114.8 139.7 129.2
Net sales, EUR million 81.8 81.7 226.0 217.4 318.5
Gross profit, EUR million 44.1 43.6 116.3 108.1 162.8
Gross margin, % 53.9 53.3 51.4 49.8 51.1
Operating expenses, EUR million 40.1 29.6 107.3 96.2 131.9
Operating result, EUR million 5.3 14.1 7.7 10.5 29.6
Operating result, % 6.5 17.2 3.4 4.8 9.3
Profit (loss) before taxes, EUR million 4.6 13.6 5.8 12.8 33.0
Profit (loss) for the period, EUR million 3.8 10.4 4.7 9.8 27.5
Earnings per share, EUR 0.21 0.58 0.26 0.54 1.52
Return on equity, % 3.6 7.9 15.7
Capital expenditure, EUR million 2.3 2.1 6.2 5.4 8.3
Depreciation, EUR million 14.1 3.6 21.3 11.3 15.1
Cash flow from operating activities, EUR million 10.0 4.6 17.1 9.8 38.8
Cash and cash equivalents, EUR million 49.9 34.1 59.2
-------------------------------------------------------------------------------
Market situation in July-September 2016
In the third quarter 2016 demand for Vaisala's offering continued to vary across
geographic regions and customer segments. Overall, weather observation market
conditions remained at the level of the first half of 2016. However, regional
differences continued to characterize weather observation market, and in
comparison to the last year majority of Vaisala's orders received consisted of
smaller contracts. Industrial measurement solutions market was favorable
overall.
In EMEA weather observation market conditions remained weak, also affected by
low demand from crude oil exporting countries. In North America weather
observation market and governmental funding were stable. In Latin America
weather observation market conditions remained weak. In APAC weather observation
market customer activity for orders remained stable, and Vaisala's deliveries
were supported by a few larger orders.
Vaisala's industrial measurement solution deliveries increased in all regions.
This was a result of favorable market conditions, and Vaisala also succeeded to
grow its market share. Growth in life science market has been the strongest.
July-September 2016 performance
Orders received
EUR million 7-9/2016 7-9/2015 Change, % 2015
---------------------------------------------------------
Weather 48.5 61.0 -21 225.6
Controlled Environment 28.1 23.2 21 94.4
---------------------------------------------------------
Total 76.6 84.3 -9 320.0
---------------------------------------------------------
In the third quarter 2016, Vaisala's orders received were EUR 76.6 (84.3)
million and decreased by 9% compared to previous year. The decrease came from
Americas.
In the third quarter 2016, Weather Business Area's orders received were EUR
48.5 (61.0) million and decreased by 21% compared to previous year. The decrease
came from Meteorology Infrastructure and Transportation business units. In
comparison to the last year majority of orders received consisted of smaller
contracts.
In the third quarter 2016, Controlled Environment Business Area's orders
received were EUR 28.1 (23.2) million and increased by 21% compared to previous
year. The increase came from all regions.
Order book
September 30, September 30, December 31,
EUR million 2016 2015 Change, % 2015
--------------------------------------------------------------------------
Weather 106.4 132.2 -19 122.2
Controlled Environment 8.3 7.5 11 7.0
--------------------------------------------------------------------------
Total 114.8 139.7 -18 129.2
--------------------------------------------------------------------------
At the end of September 2016, Vaisala's order book was EUR 114.8 (139.7) million
and decreased by 18% compared to previous year. The order book decreased in in
all regions. Of the order book EUR 53.7 (60.2) million will be delivered in
2016.
At the end of September 2016, Weather Business Area's order book was EUR 106.4
(132.2) million and decreased by 19% compared to previous year. Order book
decreased in Meteorology Infrastructure and Transportation business units. Of
the order book EUR 47.2 (53.7) million will be delivered in 2016. The EUR 20
million contract with National Hydro-Meteorological Service of Vietnam is not
included in order book for the third quarter as the order will be added in order
book when the customer has given the final approval for the technical design.
At the end of September 2016, Controlled Environment Business Area's order book
was EUR 8.3 (7.5) million and increased by 11% compared to previous year. Order
book increased in EMEA and APAC. Of the order book EUR 6.6 (6.5) million will be
delivered in 2016.
Net sales by business area
EUR million 7-9/2016 7-9/2015 Change, % 2015
----------------------------------------------------------
Weather 53.4 58.4 -8 225.5
Products 30.4 31.4 -3 116.2
Projects 14.4 18.6 -23 71.0
Services 8.7 8.4 4 38.3
Controlled Environment 28.4 23.4 21 93.0
Products 25.7 20.9 23 83.5
Services 2.7 2.4 10 9.5
----------------------------------------------------------
Total 81.8 81.7 0 318.5
----------------------------------------------------------
Net sales by geographical area
EUR million 7-9/2016 7-9/2015 Change, % 2015
----------------------------------------------------------
EMEA 23.1 23.9 -3 105.1
Americas 35.4 36.9 -4 132.0
APAC 23.3 20.9 11 81.3
----------------------------------------------------------
Total 81.8 81.7 0 318.5
----------------------------------------------------------
In the third quarter 2016, Vaisala's net sales were EUR 81.8 (81.7) million and
were at last year's level. Vaisala's net sales in EMEA were EUR 23.1 (23.9)
million and decreased by 3%, in the Americas EUR 35.4 (36.9) million and
decreased by 4% and in APAC EUR 23.3 (20.9) million and increased by 11%. At
comparable exchange rates net sales would have been EUR 81.5 (81.7) million and
decrease would have been EUR 0.2 million or 0% from previous year. The positive
exchange rate effect was EUR 0.3 million, which was mainly caused by JPY
exchange rate appreciation against EUR.
In the third quarter 2016, Weather Business Area's net sales were EUR 53.4
(58.4) million and decreased by 8% compared to previous year. The decrease came
from all business units. Especially project business decreased due to low volume
of weather radar projects. At comparable exchange rates the net sales would have
been EUR 53.5 (58.4) million and decrease would have been EUR 4.9 million or 8%
from previous year. The negative exchange rate effect was EUR 0.1 million, which
was mainly caused by GBP depreciation against EUR.
In the third quarter 2016, Controlled Environment Business Area's net sales were
EUR 28.4 (23.4) million and increased by 21% compared to previous year. The
growth exceeded 20% in all regions. At comparable exchange rates the net sales
would have been EUR 28.0 (23.4) million and increase would have been EUR 4.7
million or 20% from previous year. The positive exchange rate effect was EUR
0.3 million, which was mainly caused by JPY appreciation against EUR.
Gross margin and operating result
7-9/2016 7-9/2015 2015
-----------------------------------------------------
Gross margin, % 53.9 53.3 51.1
Weather 50.7 49.6 47.4
Controlled Environment 60.3 61.7 60.4
Operating result, EUR million 5.3 14.1 29.6
Weather -3.3 8.2 15.2
Controlled Environment 7.4 6.1 18.3
Other 1.2 -0.2 -4.0
-----------------------------------------------------
In the third quarter 2016, Vaisala's operating result was EUR 5.3 (14.1) million
and weakened by EUR 8.8 million compared to previous year. Operating result
decrease was mainly due to EUR 10.5 million write-down of intangible assets and
lower net sales in Weather Business Area. The intangible assets are from the
acquisitions of Second Wind Systems Inc. and 3TIER Inc. in 2013 and are related
to technology and customer relationships. The write-down was due to Vaisala's
slower than anticipated market penetration in the renewable energy market and
related weakening of expected return on Vaisala's Energy business investment.
After the write-down the carrying amount of intangible assets and goodwill for
Energy business unit is EUR 0.00. Gross margin was 53.9% (53.3%). Operating
expenses were EUR 40.1 (29.6) million and increased by 36%. The increase came
mainly from the EUR 10.5 million write-down of intangible assets. In addition,
operating result includes EUR 1.1 million profit related to the divestiture of
certain businesses in Transportation business unit. Operating result excluding
write-down of intangible assets was EUR 15.8 (14.1) million and 19.4% (17.2%) of
net sales.
In the third quarter 2016, Weather Business Area's operating result was EUR -3.3
(8.2) million. Operating result decrease was mainly due to lower net sales and
EUR 10.5 million write-down of intangible assets. The intangible assets are from
the acquisitions of Second Wind Systems Inc. and 3TIER Inc. in 2013 and are
related to technology and customer relationships. The write-down was due to
Vaisala's slower than anticipated market penetration in the renewable energy
market and related weakening of expected return on Vaisala's Energy business
investment. Gross margin was 50.7% (49.6%). Gross margin increase was mainly due
to higher share of product and service sales and cost savings as a result of the
restructuring of Transportation business unit. Operating expenses were EUR 30.3
(20.8) million and increased by 46%. The increase came mainly from the EUR 10.5
million write-down of intangible assets. Operating result excluding write-down
of intangible assets was EUR 7.3 (8.2) million and 13.6% (14.1%) of net sales.
In the third quarter 2016, Controlled Environment Business Area's operating
result was EUR 7.4 (6.1) million and improved by EUR 1.3 million compared to
previous year. Operating result increase was due to higher net sales. Gross
margin was 60.3% (61.7%). Gross margin decrease was mainly due to unfavorable
inventory valuations related to Vaisala's commitments as a result of products
with long life-cycles. Operating expenses were EUR 9.7 (8.3) million and
increased by 16%. The increase came mainly from continued investments in
research and development and higher sales expenses.
In the third quarter 2016, financial income and expenses were EUR -0.7 (-0.5)
million. Financial income and expenses are mainly related to the valuation of
USD denominated receivables.
In the third quarter 2016, profit/loss before taxes was EUR 4.6 (13.6) million.
Income taxes were EUR
-0.8 (-3.1) million. Net result was EUR 3.8 (10.4) million.
In the third quarter 2016, earnings per share were EUR 0.21 (0.58).
January-September 2016 performance
Orders received
EUR million 1-9/2016 1-9/2015 Change, % 2015
---------------------------------------------------------
Weather 139.5 161.2 -13 225.6
Controlled Environment 78.8 70.4 12 94.4
---------------------------------------------------------
Total 218.3 231.7 -6 320.0
---------------------------------------------------------
In January-September 2016, Vaisala's orders received were EUR 218.3 (231.7)
million and decreased by 6% compared to previous year. The decrease came from
Americas and EMEA.
In January-September 2016, Weather Business Area's orders received were EUR
139.5 (161.2) million and decreased by 13% compared to previous year. The
decrease came from Meteorology Infrastructure and Transportation business units.
In comparison to the last year majority of orders received consisted of smaller
contracts.
In January-September 2016, Controlled Environment Business Area's orders
received were EUR 78.8 (70.4) million and increased by 12% compared to previous
year. The increase came from all regions, especially from APAC.
Order book
September 30, September 30, December 31,
EUR million 2016 2015 Change, % 2015
--------------------------------------------------------------------------
Weather 106.4 132.2 -19 122.2
Controlled Environment 8.3 7.5 11 7.0
--------------------------------------------------------------------------
Total 114.8 139.7 -18 129.2
--------------------------------------------------------------------------
At the end of September 2016, Vaisala's order book was EUR 114.8 (139.7) million
and decreased by 18% compared to previous year. The order book decreased in in
all regions. Of the order book EUR 53.7 (60.2) million will be delivered in
2016.
At the end of September 2016, Weather Business Area's order book was EUR 106.4
(132.2) million and decreased by 19% compared to previous year. Order book
decreased in Meteorology Infrastructure and Transportation business units. Of
the order book EUR 47.2 (53.7) million will be delivered in 2016. The EUR 20
million contract with National Hydro-Meteorological Service of Vietnam is not
included in order book for the third quarter as the order will be added in order
book when the customer has given the final approval for the technical design.
At the end of September 2016, Controlled Environment Business Area's order book
was EUR 8.3 (7.5) million and increased by 11% compared to previous year. Order
book increased in EMEA and APAC. Of the order book EUR 6.6 (6.5) million will be
delivered in 2016.
Net sales by business area
EUR million 1-9/2016 1-9/2015 Change, % 2015
----------------------------------------------------------
Weather 148.7 148.8 -0 225.5
Products 81.2 74.9 8 116.2
Projects 41.3 47.9 -14 71.0
Services 26.2 26.1 1 38.3
Controlled Environment 77.3 68.5 13 93.0
Products 69.3 61.3 13 83.5
Services 8.1 7.2 11 9.5
----------------------------------------------------------
Total 226.0 217.4 4 318.5
----------------------------------------------------------
Net sales by geographical area
EUR million 1-9/2016 1-9/2015 Change, % 2015
----------------------------------------------------------
EMEA 67.7 71.3 -5 105.1
Americas 94.8 89.7 6 132.0
APAC 63.5 56.3 13 81.3
----------------------------------------------------------
Total 226.0 217.4 4 318.5
----------------------------------------------------------
In January-September 2016, Vaisala's net sales were EUR 226.0 (217.4) million
and increased by 4% compared to previous year. Vaisala's net sales in EMEA were
EUR 67.7 (71.3) million and decreased by 5%, in the Americas EUR 94.8 (89.7)
million and increased by 6% and in APAC EUR 63.5 (56.3) million and increased by
13%. Operations outside Finland accounted for 98% (98%) of net sales. At
comparable exchange rates net sales would have been EUR 225.5 (217.4) million
and increase would have been EUR 8.1 million or 4% from previous year. The
positive exchange rate effect was EUR 0.6 million, which was mainly caused by
JPY exchange rate appreciation against EUR.
In January-September 2016, Weather Business Area's net sales were EUR 148.7
(148.8) million and were at last year's level. Net sales increased in
Transportation business unit. At comparable exchange rates the net sales would
have been EUR 148.7 (148.8) million and decrease would have been EUR 0.1 million
or 0% from previous year. The negative exchange rate effect was EUR 0.0 million,
which was mainly caused by GBP depreciation against EUR.
In January-September 2016, Controlled Environment Business Area's net sales were
EUR 77.3 (68.5) million and increased by 13% compared to previous year. The
growth came from all regions, especially from APAC. At comparable exchange rates
the net sales would have been EUR 76.8 (68.5) million and increase would have
been EUR 8.2 million or 12% from previous year. The positive exchange rate
effect was EUR 0.6 million, which was mainly caused by JPY appreciation against
EUR.
Gross margin and operating result
1-9/2016 1-9/2015 2015
-----------------------------------------------------
Gross margin, % 51.4 49.8 51.1
Weather 46.9 45.1 47.4
Controlled Environment 60.4 59.7 60.4
Operating result, EUR million 7.7 10.5 29.6
Weather -6.1 0.1 15.2
Controlled Environment 16.7 13.5 18.3
Other -2.9 -3.1 -4.0
-----------------------------------------------------
In January-September 2016, Vaisala's operating result was EUR 7.7 (10.5) million
and weakened by EUR 2.8 million compared to previous year. Operating result
decrease was mainly due to EUR 10.5 million write-down of intangible assets
recorded to Weather Business Area's operating result in the third quarter 2016.
The intangible assets are from the acquisitions of Second Wind Systems Inc. and
3TIER Inc. in 2013 and are related to technology and customer relationships. The
write-down was due to Vaisala's slower than anticipated market penetration in
the renewable energy market and related weakening of expected return on
Vaisala's Energy business investment. After the write-down the carrying amount
of intangible assets and goodwill for Energy business unit is EUR 0.00. Gross
margin was 51.4% (49.8%). Gross margin increase was mainly due to higher sales
volumes and related improvement in scale economies. Operating expenses were EUR
107.3 (96.2) million and increased by 11%. The increase came mainly from the EUR
10.5 million write-down of intangible assets. In addition, operating result
includes EUR 1.1 million profit related to the divestiture of certain businesses
in Transportation business unit. Operating result excluding write-down of
intangible assets was EUR 18.2 (10.5) million and 8.1% (4.8%) of net sales.
In January-September 2016, Weather Business Area's operating result was EUR -6.1
(0.1) million. Operating result decrease was mainly due to EUR 10.5 million
write-down of intangible assets. The intangible assets are from the acquisitions
of Second Wind Systems Inc. and 3TIER Inc. in 2013 and are related to technology
and customer relationships. The write-down was due to Vaisala's slower than
anticipated market penetration in the renewable energy market and related
weakening of expected return on Vaisala's Energy business investment. Gross
margin was 46.9% (45.1%). Gross margin increase was mainly due to higher share
of product and service sales and cost savings as a result of the restructuring
of Transportation business unit. Operating expenses were EUR 75.8 (67.2) million
and increased by 13%. The increase came mainly from the EUR 10.5 million write-
down of intangible assets. Operating result excluding write-down of intangible
assets was EUR 4.5 (0.1) million and 3.0% (0.1%) of net sales.
In January-September 2016, Controlled Environment Business Area's operating
result was EUR 16.7 (13.5) million and improved by EUR 3.2 million compared to
previous year. Operating result increase was due to higher net sales and gross
margin. Gross margin was 60.4% (59.7%). Gross margin increase was mainly due to
higher sales volumes and related improvement in scale economies. Operating
expenses were EUR 30.0 (27.4) million and increased by 9%. The increase came
mainly from continued investments in research and development.
In January-September 2016, financial income and expenses were EUR -1.9 (2.3)
million. Financial income and expenses are mainly related to the valuation of
USD denominated receivables.
In January-September 2016, profit/loss before taxes was EUR 5.8 (12.8) million.
Income taxes were EUR
-1.1 (-2.9) million. Net result was EUR 4.7 (9.8) million. Group's effective tax
rate was 19%. The effective tax rate decreased as the write-down of intangible
assets resulted in deferred tax liability adjustment with the US tax rate of
39.5%. Excluding the write-down Group's effective tax rate would have been 23%.
Net result was EUR 4.7 (9.8) million.
In January-September 2016, earnings per share were EUR 0.26 (0.54).
Statement of financial position and cash flow
Vaisala's financial position remained strong at the end of September 2016. Cash
and cash equivalents amounted to EUR 49.9 (34.1) million. At the end of
September 2016 Vaisala did not have any material interest bearing liabilities.
The statement of financial position total was EUR 234.7 (240.4) million.
Compared to the end of September 2015 balance sheet total decreased mainly due
to intangible asset impairment of EUR 10.5 million. Cash balance has on the
other hand increased because of good operational cash flow.
In January-September 2016, Vaisala's cash flow from operating activities
increased to EUR 17.1 (9.8) million because of increased EBITDA and better
working capital development compared to the previous year.
Capital expenditure and divestments
In January-September 2016, gross capital expenditure totaled EUR 6.2 (5.4)
million. Capital expenditure was mainly related to acquired technology as well
as investment in machinery and equipment to develop and maintain Vaisala's
production and service operations.
Vaisala acquired new products and technology from Envitems Oy to expand its
offering in the growing air quality monitoring market. The acquired technology
and products measure pollution gases, like carbon monoxide, nitrous oxides,
sulfur dioxide, hydrogen sulfide and ozone, as well as particles in the air. The
products can be combined seamlessly with Vaisala industry-leading WXT multi-
weather stations, and they present a novel, innovative way to build affordable
but comprehensive air quality monitoring networks.
Depreciation and amortization was EUR 21.3 (11.3) million. The increase was
because of intangible assets write-down.
Research and development
In January-September 2016, research and development expenses totaled EUR 27.9
(25.8) million, representing 12.3% (11.9%) of net sales.
R&D by business area
7-9/ 7-9/ Change, 1-9/ 1-9/ Change,
EUR million 2016 2015 % 2016 2015 % 2015
----------------------------------------------------------------
Weather 5.9 6.1 -2 19.7 19.2 2 26.7
Controlled Environment 2.5 2.0 29 8.2 6.6 24 9.4
----------------------------------------------------------------
Total 8.5 8.0 6 27.9 25.8 8 36.1
----------------------------------------------------------------
In January-September 2016, Weather Business Area R&D expenses were 13.2% (12.9%)
of net sales. Controlled Environment Business Area R&D expenses were 10.6%
(9.7%) of net sales, which is in line with continued investments in new product
development.
Personnel
The average number of personnel employed in Vaisala January-September 2016 was
1,598 (1,616). The number of employees at the end of September 2016 was 1,574
(1,591). At the end of 2015, the number of employees was 1,588.
At the end of September 2016, 39% (42%) of employees were based outside Finland.
Vaisala to exit certain Transportation products and field services
Vaisala made the decision on February 10, 2016 to reshape its Transportation
business unit within Weather Business Area to simplify structure and improve
profitability. Going forward, Transportation business unit will focus on product
leadership, delivery capability and expansion of information services in order
to drive growth, profitability and customer focus.
Transportation business unit will exit the field service business in all
countries except the United Kingdom as Vaisala's field service offering is no
longer competitive in those countries due to increasing price pressure.
Transportation business unit will also exit the United States Automated Weather
Observing System (U.S. AWOS) business. The U.S. AWOS is based on unique
technology designed solely for the U.S. Federal Aviation Administration (FAA)
regulated small airport markets and it differs from Vaisala's common technology
platform.
Vaisala signed the agreement to sell related businesses in the U.S. in June,
2016. The first phase of the business transfer was completed according to the
plan in the beginning of August and majority of the second phase was executed
during September. Vaisala has recognized EUR 1.1 million profit from the
divestiture.
The changes lead to a reduction of 64 employees of which 11 employees were
offered a new job in Vaisala. Most of the employees under the scope of the
business transfer in the United States were employed by the acquiring company.
Estimated annual cost savings are EUR 6 million and they are expected to
contribute fully to 2017 profitability. The already realized cost saving of EUR
1.3 million and restructuring expenses of EUR 2.7 million are reported in this
January-September 2016 Interim Report.
Near-term risks and uncertainties
Uncertainties in world economic and political situation as well as changes in
customer behavior may cause demand slowdown or delays in customer projects.
Weather Business Area offers its meteorological customers large infrastructure
projects. The closing of such contracts is characterized by budgetary
constraints, long-term negotiations concerning scope, project timing and
financing. Thus, Vaisala's financial performance may vary significantly over
time. Also increasing competition, changes in price levels and exchange rates
may impact Vaisala's net sales and profitability.
Vaisala's capability to successfully complete investments, acquisitions,
divestments and restructurings on a timely basis and to achieve related
financial and operational targets represent a risk which may impact net sales
and profitability.
The ongoing business expansion in renewable energy market may be delayed due to
long authorization and approval processes, evolving business models and
customers' postponing decision making. Delays in new product ramp-ups and market
acceptance of new offering may postpone the realization of Vaisala's growth
plans.
Suppliers' and subcontractors' delivery capability or operating environment as
well as product quality may impact Vaisala's net sales and profitability. Cyber
risk and availability of IT systems may impact operations, delivery of
information services or Internet-based services or cause financial loss.
Further information about risk management and risks are available on the company
website at www.vaisala.com/investors, Corporate Governance and
www.vaisala.com/investors, Vaisala as an Investment.
Decisions by Vaisala Corporation's Annual General Meeting
Vaisala Corporation's Annual General Meeting was held on April 5, 2016. The
meeting approved the financial statements and discharged the members of the
Board of Directors and the President and CEO from liability for the financial
period January 1-December 31, 2015.
Dividend
The Annual General Meeting decided a dividend of EUR 0.95 per share,
corresponding to the total of EUR 17.1 million. The record date for the dividend
payment was April 7, 2016 and the payment date was April 14, 2016.
Board of Directors
The Annual General Meeting confirmed that the number of Board members is seven.
Petra Lundström, Yrjö Neuvo, Mikko Niinivaara, Pertti Torstila, Raimo Voipio and
Ville Voipio will continue as members of the Board of Directors. Kaarina
Ståhlberg was elected as a new member of the Board of Directors.
The Annual General Meeting confirmed that that the annual fee payable to the
Chairman of the Board of Directors is EUR 45,000 and each Board member EUR
35,000 per year. Approximately 40 percent of the annual remuneration will be
paid in Vaisala Corporation's A-shares acquired from the market and the rest in
cash. In addition, the Annual General Meeting confirmed that the compensation
for the Chairman of the Audit Committee would be EUR 1,500 per attended meeting
and EUR 1,000 for each member of the Audit Committee and Chairman and each
member of the Remuneration and HR Committee and any other committee established
by the Board of Directors for a term until the close of the Annual General
Meeting in 2017. The meeting compensation fees are paid in cash.
Auditor
The Annual General Meeting re-elected Deloitte & Touche Oy as the auditor of the
Company and APA Merja Itäniemi will act as the auditor with the principal
responsibility. The Auditors are reimbursed according to invoice presented to
the company.
Authorization for the directed repurchase of own A-shares
The Annual General Meeting authorized the Board of Directors to decide on the
directed repurchase of a maximum of 200,000 of the Company's own A-shares in one
or more instalments with funds belonging to the Company's unrestricted equity.
The authorization is valid until the closing of the next Annual General Meeting,
however, no longer than October 5, 2017.
Authorization on the issuance of the Company's own A-shares
The Annual General Meeting authorized the Board of Directors to decide on the
issuance of a maximum of 391,550 Company's own A-shares. The issuance of own
shares may be carried out in deviation from the shareholders' pre-emptive rights
(directed issue). The subscription price of the shares can instead of cash also
be paid in full or in part as contribution in kind. The authorization is valid
until April 5, 2021.
The organizing meeting of the Board of Directors
At its organizing meeting held after the Annual General Meeting the Board
elected Raimo Voipio to continue as the Chairman of the Board of Directors and
Yrjö Neuvo to continue as the Vice Chairman.
The composition of the Board committees was decided to be as follows:
Kaarina Ståhlberg was elected as the Chairman and Petra Lundström and Mikko
Niinivaara as members of the Audit Committee. The Chairman and all members of
the Audit Committee are independent both of the Company and of significant
shareholders.
Raimo Voipio was elected as the Chairman and Yrjö Neuvo and Mikko Niinivaara as
members of the Remuneration and HR Committee. Raimo Voipio is independent of the
Company. Yrjö Neuvo and Mikko Niinivaara are independent both of the Company and
of significant shareholders.
Vaisala's shares and shareholders
Vaisala's share capital totaled EUR 7,660,808 on September 30, 2016. On
September 30, 2016, Vaisala had 18,218,364 shares, of which 3,389,351 are series
K shares and 14,829,013 are series A shares. The K shares and A shares are
differentiated by the fact that each K share entitles its owner to 20 votes at a
General Meeting of Shareholders while each A share entitles its owner to 1 vote.
The A shares represent 81.4% of the total number of shares and 17.9% of the
total votes. The K shares represent 18.6% of the total number of shares and
82.1% of the total votes.
Trading in shares on the Nasdaq Helsinki Ltd
In January-September 2016, a total of 1,561,606 (1,805,426) Vaisala shares with
a value totaling EUR 42.4 (43.7) million were traded on the Nasdaq Helsinki Ltd.
The closing price of the Vaisala Corporation share on the Nasdaq Helsinki Ltd
stock exchange in September 2016 was EUR 31.50 (23.71). Shares registered a high
of EUR 34.81 (27.02) and a low of EUR 21.81 (21.55).
The market value of Vaisala's A shares on September 30, 2016 was EUR 456.7
(348.3) million, excluding the Company's treasury shares. Valuing the K shares -
which are not traded on the stock market - at the rate of the A share's closing
price on the last day of September, the total market value of all the A and K
shares together was EUR 563.4 (428.7) million, excluding the Company's treasury
shares.
At the end of September, 2016 Vaisala Corporation had 7,494 (7,222) registered
shareholders. Ownership outside of Finland and nominee registrations represented
14.48% (15.53%) of the company's shares. Households owned 40.74% (45.05%),
private companies 14.34% (13.86%), financial and insurance institutions 12.80%
(11.44%), non-profit organizations 11.65% (7.92%) and public sector
organizations owned 5.97% (6.18%).
Repurchases of company's treasury shares
Vaisala Corporation's Board of Directors resolved to commence repurchases of
shares under the authorization given by the Vaisala Annual General Meeting held
on April 5, 2016. The Board of Directors resolved to directed repurchase of a
maximum of 200,000 of the Company's own A shares in one or more instalments with
funds belonging to the Company's unrestricted equity. The repurchases commenced
on May 2, 2016.
Transfer of company's treasury shares
The Board of Directors of Vaisala Corporation decided to transfer a total of
1,500 Company's series A treasury shares to a person participating in the share
based incentive plan. The transfer was done in June 2016 according to the terms
and conditions of the Performance Share Plan.
At the end of September 2016, the Company held a total of 331,380 Vaisala A
shares, which represented 2.2% of all A-shares in the Company and 1.8% of all
shares in the Company.
More information about Vaisala's share and shareholders are presented on the
website, www.vaisala.com/investors.
Market outlook 2016
As typical, in weather observation market customer activity is expected to
improve seasonally towards the end of the year. However, political instability,
budgetary constraints and slow activity in weather radar market are expected to
affect Vaisala's deliveries in the fourth quarter. In EMEA outlook is still
constrained by limited demand from CIS countries. In North America annual orders
are expected to decrease slightly from 2015, due to absence of larger weather
infrastructure programs. Signs of economic stabilization have been registered in
Latin America, but delays in customers' decision making are still expected. In
APAC weather observation market annual orders are expected to increase compared
to 2015. Renewable energy market outlook has remained solid, but development and
adaptation of Vaisala's energy services has been slower than expected and
commoditization of certain products has led to deterioration of market prices.
Demand for industrial measurement solutions is expected to remain stable
globally.
Business outlook for 2016
Vaisala estimates its full year 2016 net sales to be in the range of EUR
310-330 million and its operating result (EBIT) to be in the range of EUR 18-28
million.
Vantaa, October 26, 2016
Vaisala Corporation
Board of Directors
The forward-looking statements in this release are based on the current
expectations, known factors, decisions and plans of Vaisala's management.
Although the management believes that the expectations reflected in these
forward-looking statements are reasonable, there is no assurance that these
expectations would prove to be correct. Therefore, the results could differ
materially from those implied in the forward-looking statements, due to for
example changes in the economic, market and competitive environments, regulatory
or other government-related changes, or shifts in exchange rates.
Financial information and changes in accounting policies
The Interim Report and Half Year Financial Report have been prepared in
accordance with IAS 34, Interim Financial Reporting, following the same
accounting policies and principles as in the annual financial statements for
2015. All reported figures are Group figures. All presented figures have been
rounded and consequently the sum of individual figures may deviate from the sum
presented.
The preparation of the financial statements in accordance with IFRS requires
Vaisala's management to make estimates and assumptions that affect the valuation
of the reported assets and liabilities and the recognition of income and
expenses in the statement of income. Although the estimates are based on the
management's best knowledge at the date of the interim report, actual results
may differ from the estimates. The Interim Report and Half Year Financial Report
are unaudited.
Consolidated Statement of Income
-----------------------------------------------------------------------------
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
EUR million 2016 2015 2016 2015 2015
-----------------------------------------------------------------------------
Net sales 81.8 81.7 226.0 217.4 318.5
Costs of sales -37.7 -38.2 -109.8 -109.2 -155.6
-----------------------------------------------------------------------------
Gross profit 44.1 43.6 116.3 108.1 162.8
Sales, marketing and administrative costs -31.7 -21.6 -79.4 -70.4 -95.8
Research and development costs -8.5 -8.0 -27.9 -25.8 -36.1
Other operating income and expense 1.4 0.1 -1.4 -1.4 -1.3
-----------------------------------------------------------------------------
Operating profit (loss) 5.3 14.1 7.7 10.5 29.6
Share of result in associated companies - - - - -0.1
Financial income and expenses, net -0.7 -0.5 -1.9 2.3 3.5
-----------------------------------------------------------------------------
Profit (loss) before taxes 4.6 13.6 5.8 12.8 33.0
Income taxes -0.8 -3.1 -1.1 -2.9 -5.5
-----------------------------------------------------------------------------
Profit (loss) for the period 3.8 10.4 4.7 9.8 27.5
Earnings per share, EUR 0.21 0.58 0.26 0.54 1.52
Diluted earnings per share, EUR 0.21 0.57 0.26 0.54 1.51
Consolidated Statement of Comprehensive Income
-------------------------------------------------------------------------------
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
EUR million 2016 2015 2016 2015 2015
-------------------------------------------------------------------------------
Items that will not be reclassified to profit or
loss
Actuarial profit (loss) on post-employment
benefits 0.0 0.0 0.0 0.0 0.4
-------------------------------------------------------------------------------
Total 0.0 0.0 0.0 0.0 0.4
-------------------------------------------------------------------------------
Items that may be reclassified subsequently to
profit or loss
Currency translation differences -0.2 -0.4 -0.9 2.6 3.1
-------------------------------------------------------------------------------
Total -0.2 -0.4 -0.9 2.6 3.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total other comprehensive income -0.2 -0.4 -0.9 2.6 3.5
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total comprehensive income 3.6 10.0 3.8 12.5 31.0
-------------------------------------------------------------------------------
Consolidated Statement of Financial
Position
-------------------------------------------------------------------------------
EUR million
-------------------------------------------------------------------------------
September 30, September 30, December 31,
Assets 2016 2015 2015
-------------------------------------------------------------------------------
Non-current assets
Intangible assets 20.0 34.7 34.0
Property, plant and equipment 41.6 43.8 44.1
Investments 0.1 0.1 0.1
Investment in associated companies 0.8 0.8 0.8
Long-term receivables 0.8 0.3 0.8
Deferred tax assets 10.4 10.6 10.2
-------------------------------------------------------------------------------
Total non-current assets 73.6 90.3 90.0
Current assets
Inventories 39.1 42.1 39.0
Trade and other receivables 69.7 72.8 74.6
Income tax receivables 2.5 1.2 1.2
Cash and cash equivalents 49.9 34.1 59.2
-------------------------------------------------------------------------------
Total current assets 161.2 150.2 174.0
-------------------------------------------------------------------------------
Total assets 234.7 240.4 264.0
-------------------------------------------------------------------------------
September 30, September 30, December 31,
Shareholders' equity and liabilities 2016 2015 2015
-------------------------------------------------------------------------------
Shareholders' equity
Share capital 7.7 7.7 7.7
Other reserves 1.7 0.9 1.1
Cumulative translation adjustment 2.0 2.4 2.9
Treasury shares -8.5 -3.1 -4.3
Retained earnings 161.5 155.9 173.9
-------------------------------------------------------------------------------
Total shareholders' equity 164.3 163.8 181.3
Non-current liabilities
Interest-bearing liabilities 0.0 0.0 0.0
Post-employment benefit obligations 2.4 2.4 2.1
Deferred tax liabilities 0.9 4.7 4.5
Provisions for other liabilities
and charges - 0.2 0.2
Other long-term liabilities 1.0 1.1 0.8
-------------------------------------------------------------------------------
Total non-current liabilities 4.4 8.5 7.6
Current liabilities
Interest-bearing liabilities 0.0 0.0 0.0
Advances received 3.7 3.6 3.9
Income tax liabilities 0.2 1.4 1.7
Provisions for other liabilities
and charges 3.0 0.1 0.4
Trade and other payables 59.0 63.1 69.2
-------------------------------------------------------------------------------
Total current liabilities 65.9 68.2 75.1
-------------------------------------------------------------------------------
Total shareholders' equity and
liabilities 234.7 240.4 264.0
-------------------------------------------------------------------------------
Consolidated Statement of
Changes in Shareholders'
Equity
-------------------------------------------------------------------------------
Share Other Treasury Translation Retained
EUR million capital reserves shares adjustment earnings Total
-------------------------------------------------------------------------------
Balance at Jan 1, 2015 7.7 2.5 -2.5 -0.2 162.6 170.0
Profit (loss) for the
period 9.8 9.8
Other comprehensive
income 0.0 2.6 2.6
Dividend paid -16.4 -16.4
Purchase of treasury
shares -2.6 -2.6
Sale of treasury shares 2.1 -2.1 0.0
Share-based payment -1.6 1.9 0.3
-------------------------------------------------------------------------------
Balance at Sep 30, 2015 7.7 0.9 -3.1 2.4 155.9 163.8
-------------------------------------------------------------------------------
Share Other Treasury Translation Retained
EUR million capital reserves shares adjustment earnings Total
-------------------------------------------------------------------------------
Balance at Jan 1, 2016 7.7 1.1 -4.3 2.9 173.9 181.3
Profit (loss) for the
period 4.7 4.7
Other comprehensive
income -0.0 -0.9 -0.9
Dividend paid -17.1 -17.1
Purchase of treasury
shares -4.1 -4.1
Share-based payment 0.6 0.0 0.6
-------------------------------------------------------------------------------
Balance at Sep 30, 2016 7.7 1.7 -8.5 2.0 161.5 164.3
-------------------------------------------------------------------------------
Consolidated Cash Flow Statement
-------------------------------------------------------------------------------
EUR million 1-9/2016 1-9/2015 1-12/2015
-------------------------------------------------------------------------------
Cash flows from operating activities
Cash receipts from customers 232.8 231.6 325.4
Other income from business operations 0.0 -1.4 -1.4
Cash paid to suppliers and employees -207.2 -213.4 -277.1
Financials paid, net -1.1 -1.7 -1.0
Income taxes paid, net -7.4 -5.2 -7.2
-------------------------------------------------------------------------------
Cash flow from operating activities 17.1 9.8 38.8
Cash flows from investing activities
Capital expenditure on fixed assets -6.2 -5.4 -8.3
Divestments 1.2 0.1 0.2
-------------------------------------------------------------------------------
Cash flow from investing activities -5.1 -5.3 -8.1
Cash flows from financing activities
Dividends paid -17.1 -16.4 -16.4
Purchase of treasury shares -4.0 -2.6 -3.9
Change in loan receivables 0.0 0.0 0.0
Change in leasing liabilities 0.0 0.0 0.0
-------------------------------------------------------------------------------
Cash flow from financing activities -21.1 -19.0 -20.2
Cash and cash equivalents at the beginning of
period 59.2 47.6 47.6
Net increase (+) / decrease (-) in cash and cash
equivalents -9.1 -14.5 10.5
Effect from changes in exchange rates -0.2 0.9 1.0
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of period 49.9 34.1 59.2
-------------------------------------------------------------------------------
Notes for Report
Orders Received by Business Area
-------------------------------------------------------------------------------
EUR million 7-9/2016 7-9/2015 1-9/2016 1-9/2015 1-12/2015
-------------------------------------------------------------------------------
Weather 48.5 61.0 139.5 161.2 225.6
Controlled Environment 28.1 23.2 78.8 70.4 94.4
-------------------------------------------------------------------------------
Total 76.6 84.3 218.3 231.7 320.0
-------------------------------------------------------------------------------
Net Sales by Business Area
EUR million 7-9/2016 7-9/2015 1-9/2016 1-9/2015 1-12/2015
-------------------------------------------------------------------------------
Weather
Products 30.4 31.4 81.2 74.9 116.2
Projects 14.4 18.6 41.3 47.9 71.0
Services 8.7 8.4 26.2 26.1 38.3
-------------------------------------------------------------------------------
Total 53.4 58.4 148.7 148.8 225.5
Controlled Environment
Products 25.7 20.9 69.3 61.3 83.5
Services 2.7 2.4 8.1 7.2 9.5
-------------------------------------------------------------------------------
Total 28.4 23.4 77.3 68.5 93.0
Sales, Other 0.0 0.0 0.0 0.0 0.0
-------------------------------------------------------------------------------
Total Sales 81.8 81.7 226.0 217.4 318.5
-------------------------------------------------------------------------------
Operating Result by Business
Area
-------------------------------------------------------------------------------
EUR million 7-9/2016 7-9/2015 1-9/2016 1-9/2015 1-12/2015
-------------------------------------------------------------------------------
Weather -3.3 8.2 -6.1 0.1 15.2
Controlled Environment 7.4 6.1 16.7 13.5 18.3
Other 1.2 -0.2 -2.9 -3.1 -4.0
-------------------------------------------------------------------------------
Total 5.3 14.1 7.7 10.5 29.6
-------------------------------------------------------------------------------
Net Sales by Geographical Area
-------------------------------------------------------------------------------
EUR million 7-9/2016 7-9/2015 1-9/2016 1-9/2015 1-12/2015
-------------------------------------------------------------------------------
EMEA 23.1 23.9 67.7 71.3 105.1
Americas 35.4 36.9 94.8 89.7 132.0
APAC 23.3 20.9 63.5 56.3 81.3
-------------------------------------------------------------------------------
Total 81.8 81.7 226.0 217.4 318.5
-------------------------------------------------------------------------------
Personnel
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2016 2015 2016 2015 2015
-------------------------------------------------------------------------------
Average personnel 1,599 1,614 1,598 1,616 1,611
Personnel at the end of period 1,574 1,591 1,574 1,591 1,588
-------------------------------------------------------------------------------
Financial Instruments
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2016 2015 2016 2015 2015
-------------------------------------------------------------------------------
Nominal value of financial derivatives, EUR
million 33.2 29.8 33.2 29.8 36.5
Fair values of financial derivatives, assets,
EUR
million 0.0 0.3 0.0 0.3 0.1
Fair values of financial derivatives,
liabilities, EUR
million 0.5 0.6 0.5 0.6 0.8
-------------------------------------------------------------------------------
Financial derivatives consist solely of foreign currency forwards and they are
measured based on price information derived from active markets and commonly
used valuation methods (Fair value hierarchy 2). Financial contracts are
executed only with counterparties that have high credit ratings.
Share Information
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2016 2015 2016 2015 2015
-------------------------------------------------------------------------------
Number of shares outstanding, thousand 17,887 18,079 17,887 18,079 18,027
Number of treasury shares, thousand 331 139 331 139 192
Number of shares, weighted average,
diluted,
thousand 18,176 18,212 18,241 18,212 18,259
Number of shares, weighted average,
thousand 17,918 18,114 17,983 18,124 18,103
Number of shares traded, thousand 389 241 1,562 1,805 2,508
Share price, highest, EUR 34.81 25.20 34.81 27.02 27.02
Share price, lowest, EUR 27.89 22.50 21.81 21.55 21.55
-------------------------------------------------------------------------------
Key Ratios
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2016 2015 2016 2015 2015
-------------------------------------------------------------------------------
Earnings per share, EUR 0.21 0.58 0.26 0.54 1.52
Earnings per share, diluted, EUR 0.21 0.57 0.26 0.54 1.51
Equity per share, EUR 9.19 9.06 9.19 9.06 10.06
Return on equity, % 3.6 7.9 15.7
Cash flow from operating activities per
share, EUR 0.56 0.25 0.96 0.54 2.15
Solvency ratio, % 71.1 69.2 69.7
-------------------------------------------------------------------------------
Further information
Kaarina Muurinen, CFO
Mobile +358 40 577 5066
Vaisala Corporation
Telephone conference and Audiocast
An English-language conference call for investors and analysts will be held
today, October 26, 2016 at 4:00 p.m. (Finnish time).
FI: +358 9 8171 0495
UK: +44 20 3194 0552
SE: +46 8 5664 2702
US: +1 855 7161 597
Live audiocast of the presentation by Kjell Forsén, President and CEO will start
at 4:00 p.m. and will be available at www.vaisala.com/investors. A recording
will be published at about 6:00 p.m.
Distribution
Nasdaq Helsinki
Key media
www.vaisala.com
Vaisala is a global leader in environmental and industrial measurement. Building
on 80 years of experience, Vaisala contributes to a better quality of life by
providing a comprehensive range of innovative observation and measurement
products and services for chosen weather-related and industrial markets.
Headquartered in Finland, Vaisala employs approximately 1,600 professionals
worldwide and is listed on the Nasdaq Helsinki stock exchange.
www.vaisala.com www.twitter.com/VaisalaGroup
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